A British firm yesterday said it had struck oil in the Falklands - threatening a fresh row with Argentina.

Rockhopper Exploration's find would be the first since UK companies began searching there in February.

Managing director Samuel Moody said: "Current indications are that we have made the first oil discovery... we are extremely excited by the results."

Further testing is needed before it decides whether to start drilling. If it does, the oil could prove a huge boost to the UK economy, worth up to £25billion. Rockhopper's shares soared 152% on the news. The value of other Falklands oil explorers also rose.

However, Argentina still claims sovereignty over the Falklands and its waters. In February president Cristina Fernandez de Kirchner imposed new shipping curbs.

But UK oil analyst Richard Rose said: "If you find a commercial discovery it will be commercialised - with or without the co-operation of the Argentinians."

NEW HOPE IN RIG DISASTER

A massive concrete and steel box was set to be lowered into the Gulf of Mexico last night to stem a tide of crude oil threatening a wildlife disaster.

Bp, whose rig exploded last month, hopes the device will funnel the oil to a tanker. The operation began as oil started coming ashore in Louisiana.